The Gujarat government is planning to attract fresh investment of around Rs 5000 crore in the textile sectors across the value chain to extend textile policy by a year. The extension will add 300 ginning units, to 1,400, and double the spinning capacity to four million a year, apart from setting up of units in other segments, such as technical textiles, silk, jute and wool.

The state government offers interest subsidy of five percentage points on new plant and machinery (P&M) for value addition, apart from six percent and seven percent for technical textiles and on new P&M for cotton spinning, respectively as mentioned in the policy.

Not only refund of value added tax (VAT) on expansion of existing units from cotton to garments and made-ups but also to power rate concession on new investment for cotton spinning at a rupee a unit.

The government is extending the financial support of 50 percent (up to Rs 30 crore) for establishing a textile and apparel park, and a maximum of Rs 10 crore for other technical parks.

“There has been shifting of units from Tamil Nadu, Telangana and Maharashtra. The extension would see a boost in fresh investment,” Siddhartha Rajagopal, executive director, The Cotton Textiles Export Promotion Council said.

The government said that the textile policy implemented in 2013, has attracted around Rs 20,000 crore of investment in four years and created 2.5 million jobs, half to rural women. The government estimates addition till now of a million units of spindle capacity in the spinning sector and setting up of over 1,000 units in technical textiles.

The Clothing Manufacturers Association of India (CMAI) president, Rahul Mehta said that the overall policy was advantageous for attracting investment in the state.

Many other states have followed Gujarat's policy to attract flow into this sector and have also announced incentives for setting up of new textile units. Gujarat has been the largest producer and exporter of cotton in the country. However, Gujarat has an advantage in terms of strategic location near large consumer markets and in ports for export.